Understanding Employers Liability Insurance
Employers Liability insurance provides covers for:
- the costs of settlement or damages in respect of claims for personal injury to employees;
- which occurred in the course of their employment; and
- not covered by the Accident Compensation Corporation (ACC).
The policy also covers the cost incurred in defending or settling these claims.
Why is it needed?
Everyone in New Zealand has ACC cover whether they are at work, at home, or anywhere. ACC covers all accidents and mental injuries suffered because of an accident or certain criminal acts. From an employer’s perspective it also covers gradual injuries, diseases and infections caused whilst at work. Whilst in most other countries there is a large risk to employers from claims that employees might make against them, in New Zealand this is mainly insured through ACC levies
Employees can however still sue for work-related illnesses or situations that are not covered by ACC.
ACC doesn’t cover
- stress, hurt feelings, loss of enjoyment or other emotional issues (these may be covered if these are the direct result of a physical injury or sexual abuse)
- conditions related mainly to ageing
- non-traumatic hernias, eg from coughing or sneezing, or not directly as a result of trauma
- injuries that come on gradually and are not due to a work task (non-occupational gradual process injuries)
- damage to items that do not replace body parts such as hearing aids, glasses, pacemakers and gastric bands.
Because there aren’t many situations where an employee would make a claim, Insurance premiums reflect this.
Employers Liability claims for which we may cover you include:
- Mental injury or stress not accompanied by any physical injury
- Employees working in very stressful environments or with difficult subject matters can suffer a mentally from such work. If an employer doesn’t take reasonable steps to control this.
- Examples of this could include dealing with sexual offences or disturbing material. Being significantly overworked and under extreme prolonged workloads.
- Nervous shock or fright not accompanied by any physical injury.
- Heart attack or stroke caused by stress.
Disclaimer: There are other factors and policy exclusions that may influence whether a claim is covered by a policy or not. Policy coverage will solely be determined by the policy documents and policy wording, and no reliance can be placed on the content of this blog post whatsoever. The content and examples of this blog post are only given to provide a general understanding or to help explain a specific concept.